Our Newest Investment – Kapost

Posted by: George Mulhern

The world of publishing has been in the midst of transformation for some time now. The web has enabled, and created the expectation, that people can get their news and information much faster and at much lower costs. There is pressure on publishers to provide the immediacy readers want, while at the same time significantly lowering costs to acquire and deliver their content. The New York Times has a staff of 1200 and captures 15 million monthly readers/visitors. The Huffington Post, on the other hand, has a staff of 60 and captures 30 million monthly readers/visitors. Old world, new world.

How does Huffington Post do it? They have built newsroom technology and tools that allows them to source and publish content from a large community of independent contributors. It takes a lot of money, time and attention to build a newsroom platform like this. Not practical for most publishers — whose focus is on publishing, not technology.

The Kapost team recognized this need and has built a technology infrastructure/platform that now allows any publisher to effectively leverage large networks of contributors in order to produce more and better content, in a very cost effective way. Kapost technology takes the standard processes of the newsroom and moves them into an online workflow. By virtualizing processes such as editorial calendars, contributor reputation development, performance tracking and contributor payment, the platform enables editors to manage large networks of content contributors. At the same time, contributors can manage their interactions with multiple publishers through the Kapost network.

Here at Highway 12 Ventures, we are excited about this investment in Kapost for a number of reasons. The Kapost offering fills an important need in a market that is in the midst of transformation –Kapost will be an important tool in helping publishers successfully navigate that transformation. And the market is very large. Publishers in the U.S. alone spend over $20B annually on content. Most importantly, we believe the founders have what it takes to make Kapost a tremendous success. Toby Murdock, Mike Lewis and Nadar Aknoukh are successful, repeat entrepreneurs. They have the smarts, the skills, the passion and the perseverance to build a great company. We are thrilled to be a part of it and looking forward to contributing in any way that we can.

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on Wednesday, September 22nd, 2010 at 8:26 am and is filed under Portfolio.
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I'm sure you and your colleagues considered the long-term prospects of paying writers a pittance or nothing at all to fill the community content coffers, or paying them by performance, even though writers have absolutely no control on how well the content distributor can optimize its content for searches, or compete as other content distributors flood the market to get a piece of the $20B pie. Maybe you have considered all this, and maybe it won't matter.

Maybe Kapost's target market doesn't target serious writers. Many writers have flocked to content distribution models as a way to make money. Some contribute just for the love of writing and sharing, with any money earned as a bit of frosting. But writers who write for a living, I'm guessing they will continue to market on their own in the physical and digital worlds and develop relationships with advertisers for online click-through ads. I'm also guessing that there is a large untapped market of serious writers who don't want to do all that, and would go absolutely berserk if one of these content distribution companies would value the actual content–how it could make the world a better place–over how many people clicked through to articles.

But maybe that is the point, too. That this is simply a marketing model, not a solution to make the world a better place.

Good luck with your venture. I'm curious along with ya'll on how these models pan out long-term.

Rita, Thanks for the insightful comments. The industry is in the midst of disruption and transformation and at the end of the day I believe it will be the consumers of the content that will have the biggest say in how publishing evolves. If we look to other industries that have been disrupted as a guide, those that acknowledge and embrace the changes early can survive and thrive. I believe there will always be a market for high quality writing and people willing to pay for it. These new distribution markets may just open up opportunities to reach a wider audience with your work. Like you said though, we\’ll have to wait and see how it pans out. Thanks again.